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Aug 14, 2015 12:42 AM ET

Archived: Flexible funding vs all or nothing: pros and cons

iCrowdNewswire - Aug 14, 2015

It’s not rare to find people who think all or nothing campaign are synonymous to crowdfunding. That belief, however, is wrong. Since last year, we have been watching a growing number of flexible crowdfunding, campaigns that will deliver you the money even if you didn’t reach your goal. That happens because this type of campaign can be better in some situations.

When choosing a campaign type, you should keep in mind your goals and costs. You can choose flexible funding if any amount will help you somehow and the costs to make the product and deliver it are not high enough so you can’t actually put it to work. Mind the scale that you need to break even.

When to choose flexible funding

If you are raising money to test a market for a new product for your already existing company and you would like to use crowdfunding as a complete market research tool, from product acceptance to post sales evaluations, without having to significantly alter your existing structure, flexible funding can be a cheaper method to traditional market analysis. Afterall, if the campaign fails to meet the goals, that can be due to a bad marketing strategy, but you’ll have the product shipped to early adopters and can see how they use your product.

The same logic applies to many charitable initiatives. If any amount is enough, then you should go after flexible funding. And you can start over all the time, turning crowdfunding into an endless loop of money raising.

When trying a flexible funding, you can aim high. A high goal may be a drawback for some people but can also make you look very serious in your proposal, something that will make them more confident when you start. But you can have a problem if not enough early birds hatch on your campaign. With a few days to run out, people won’t be motivated to back you up if you are far from your goal.

In a flexible funding, your goal is merely a plea to be used as advertising.

When to choose all or nothing

If you calculated your costs and you need to build your business from scratch, i.e., you need to design tools, buy machinery, rent a place to start working, hire people and so on, costs that you’ll dilute in your products, then you definitely need a minimal amount to start. And the right campaign for you is all or nothing.

You should be aware to calculate your costs exactly. It’s very important to define your minimal amount and put it as your goal. Asking too much is a very common mistake. Your goal should be as low as possible.

If your product or service is captivating enough, people won’t mind your goal. There are hundreds of cases of campaigns that beat the goal by 5 or 10 times. If you manage to make your campaign that successful, people will notice. A lower goal might play for you, not against you.

Via iCrowdNewswire
Tags: , Blog
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